What is the key issue in the case of Ferguson v FCT?

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BlackTom AI · Accepted Answer

Exploring the question about Ferguson v FCT, we start by considering what the case is generally concerned with in Australian tax law and partnership concepts.
Option a: 'A business is carried on in a ‘business-like manner’' This choice points to the idea that the characterization of a business involves whether its conduct exhibits a business-like manner, which is a central theme in Ferguson v FCT. The decision emphasizes the practical conduct and undertakings of the parties rather than merely formal labels, so this option aligns with the key issue.
Option b: 'To be carrying on a business in common, the parties must be engaged in the same business.' This statement introduces a requirement about common business activity. While joint ventures can involve collaboration, Ferguson v FCT does not hinge on the parties being in the exact same line of business; it focuses more on whether a business is carried on in a business-like way and the nature of the arrangement, so this is not the sole or decisive issue.
Option c: 'A single venture can satisfy ‘carrying on a business’ in certain circumstances' This option acknowledges that even a one-off or single venture can constitute carrying on a business if the circumstances show a business-like operation. Although plausible in some contexts, the Ferguson v FCT case emphasizes the character of the conduct (business-like), rather than insisting that a single venture per se always satisfies the test, making this a conditional rather than a universal statement.
Option d: 'Mutuality of rights, and not the words used, will determine whether a partnership exists' This choice centers on the idea of mutual rights and the substance over wording in determining partnership. While substance over form is a recurrent theme in partnership analysis, Ferguson v FCT’s key issue is more specifically about whether the arrangement constitutes carrying on a business in a business-like manner rather than focusing primarily on mutual rights alone, so this option misstates the central issue.
In summary, the options collectively assess different facets of how a business or partnership might be identified in tax law, with the core scrutiny in Ferguson v FCT centering on whether the arrangement is carried on in a business-like manner rather than purely on formal labels, the sameness of business, or the broad emphasis on rights over conduct.

MCD2070 - T1 - 2025 Partnership Quiz

What is the key issue in the case of Ferguson v FCT?

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